Employees of Flipkart and Myntra Set for $700 Million Cash Bonanza Following PhonePe Split
Flipkart and Myntra employees are set to receive a cash payout of approximately $700 million as compensation for the loss in share value resulting from the separation of Flipkart's digital payments subsidiary, PhonePe. Walmart, which acquired a majority stake in Flipkart in 2018, will facilitate the payout. The Human Resources department of the company has already reached out to eligible employees through email notifications.
Flipkart, with a workforce of over 15,000 employees, and Myntra, with around 2,500-3,500 employees, will benefit from this payout. It is anticipated to be the final buyback program conducted by Flipkart before its highly anticipated initial public offering (IPO) scheduled for 2023.
Flipkart had acquired PhonePe in 2016 for $20 million, and it operated as a subsidiary until December of the previous year when both companies announced a complete ownership separation. Despite the separation, Walmart remains the parent company of both Flipkart and PhonePe, retaining the majority ownership in both entities.
In a joint statement, Flipkart and PhonePe clarified that existing shareholders of Flipkart Singapore and PhonePe Singapore, led by Walmart, directly purchased shares in PhonePe India. This move ensures PhonePe's status as a fully India-domiciled company, a process initiated earlier in the year. Walmart will maintain its majority shareholder position in both business groups.
Flipkart CEO Kalyan Krishnamurthy expressed confidence in PhonePe's continued growth and its mission to provide financial inclusion to the Indian population, even after the separation from Flipkart. The payout aims to alleviate the financial impact experienced by eligible employees due to the separation of PhonePe and to recognize their contributions to the company.
This cash payout serves as a significant step in acknowledging and compensating employees for the value erosion of their shares following the separation. It reflects Flipkart's commitment to prioritizing its workforce and ensuring their fair participation in the financial outcomes of the company.